Does the President Actually Understand the Concept of Insurance?

As much as leftists like to call Sarah Palin stupid, I’m think I can confidently assert that she knows the difference between liability and comprehensive automotive insurance.

I have long assumed that the demagoguery by Obama and other leftists against the insurance companies was just cynical “eat the rich” politics. I assumed that behind closed doors, these Ivy League grads did actually understand that insurance provides protection against statistical risk only and not protection against absolute certainties. I assumed they understood that money being payed out in claims has to be balanced out by money paid in as premiums or the entire system will collapse very quickly.

However, hearing the President speak on the matter of insurance over the course of the past year, I’ve come to the conclusion that he, personally, simply does not understand how insurance works. I fear that no one else around him really understands either.

I say this because if he did understand how insurance worked, he would know that the story about his car insurance would make him look like an idiot.

He would have known that most people would say, “Well, yes, liability insurance pays for the damage that you might do to the property and lives of others. Comprehensive pays to repair the damage to your own car. The law requires that you protect the rights of others, it doesn’t require that pay for your own car in any particular way. Everybody know this.”

I find myself hoping that the video clip was somehow taken out of context and he was trying to illustrate something else, like, how naive young people can be about financial affairs

Yet looking back at his keynote speech of last year we see the same shocking naiveté/cynicism.

What this plan will do is make the insurance you have work better for you. Under this plan, it will be against the law for insurance companies to deny you coverage because of a preexisting condition

I think he sees insurance in some kind moralistic literary terms. I don’t think he actually understands how the mathematics of insurance limit any insurer’s options, even the government’s. I think he believes that premiums, payouts and profits are all ultimately utterly arbitrary and that if we want a different system, we must simply just will ourselves to behave differently and thus bring it about.

Still I hope I am wrong. I’m not sure I can sleep well at night knowing that the man who has both the desire and the power to re-engineer our society doesn’t really understand one of its most important functional parts.

10 thoughts on “Does the President Actually Understand the Concept of Insurance?”

  1. I was happy that you commented on his insurance statement during the summit. It seemed totally off-topic, as well as off-the-mark as far as comprehension of insurance.
    If he doesn’t understand a concept as simple as basic insurance coverage, it makes me wonder what other concepts he does not understand.
    Several people have commented who knew him at UofC that he would adhere steadfastly to beliefs no matter what opposing arguments might be shown to undermine those beliefs.
    It is one thing to not understand a concept and to seek more information from others who do know, but to expose one’s ignorance and then willfully go forward with faulty thinking as the President is indeed a very, very serious.
    Knowing what one does NOT know is as important as knowing what one does know.
    President Obama did himself no favors in speaking about his own car insurance incident.

  2. This goes along with the next post on alternative energy. He doesn’t even seem to know that, when someone runs into your car from behind, it is their fault and you call THEIR insurance company to get your car fixed. This is the basic matter of knowing how the world works. Even Charlie Gibson, no right winger, knew that capital gains taxes affect investment and may result in lower revenue if the tax rate is so high that investment is discouraged. Obama’s reply suggested he doesn’t care but I even wonder if that concept was new to him.

    This man seems to have little concept of how a modern society functions. We still don’t know how he was accepted to Harvard or what his grades were. He seems to me to have drifted along. I’m not conspiracy minded but I do wonder who guided him along. I wonder sometimes if he could have fed himself, left to his own devices. He’s not stupid but he seems to have lived 45 years and more with a very tenuous connection with practical life.

  3. Has BO ever said anything that qualifies as something other that pure unadulterated bullpucky. I don’t think he has demonstrated any serious intelligence or understanding of any sort. He is as near as I can tell, pure hot air.

  4. Perhaps it is because I’m not a very good driver and have more conversations with my insurance company than they or I would like, but I honestly can’t imagine anyone who doesn’t know the difference between liability and comprehensive, that doesn’t know who is at fault in a rear end. That that someone is a lawyer makes it even stranger. What strikes me about this is that he must have gone through life with absolutely no curiosity about the world around him, no humility about what he didn’t know and no sense that he was responsible for anything.

    How many times have we been told this guy is brilliant? How many times have we been told that George Bush was not only stupid but completely lacking in intellectual curiosity? I suspect that he, like most of us, at some point had an accident or listened to a friend discuss an accident, talked to his insurer, listened to his options. Perhaps not, but I can’t imagine that guy, a son of privilege, not assuming that insurance choices were his and not the government’s.

    Obama’s assumptions are deeply disturbing: the government doesn’t, shouldn’t, make laws that force us to insure clunkers as we do a new Lexus, that require us all to make the same choices. These people have made a mockery of diversity.

  5. The bottom line is the president doesn’t seem to know much about anything – including how to keep his party in power.

  6. Its called rhetoric, or propaganda; obviously he understands the difference. You have to understand that you’re dealing with leftists. Leftists believe that they’re allowed to lie, cheat, and steal to achieve their goals. They believe in “any means possible.” Remember that killing 100 million people was necessary for “progress.”

    This is big disadvantage when it comes to the Right. The Right still tries to operate morally based on Middle Ages chivalry. The Right is about raw power. The Left developed in the attempt to defeat raw power. It’s a political operating philosophy based on winning, not on honor. Until the mid 1800’s, there was only Right, where entities fought and either won or lost. They didn’t infiltrate the institutions from the inside and use guilt or “historical injustice” or perceived class differences. They just used raw power.

    The Left took the Western world by surprise because it’s origin is extra-Western. It doesn’t make sense to the Western mind. It doesn’t feel right. The people it appeals to most in the West are generally dysfunctional individuals who feel constant resentment and paranoia. These people suffer from extreme feelings of persecution, which grows more and more by Leftwing socialization. I was personally told by a college professor (anthropology) that my service in Iraq was a form of “structural violence” and that I was a victim of capitalist exploitation. I didn’t even know this until that day?

    I’ll be back later with more, as its now time for me to be exploited (I have to go to work).

  7. Actually, I think the left is the child of the French Revolution. The Glorious Revolution of 1688 and the American Revolution were both very conservative in philosophy. James was the revolutionary, intent on overturning the protestant tradition since Elizabeth. LIkewise, George defied the conservatives who identified with the colonists. Cromwell would like to have been a king and tried to place his son Richard in his stead as he grew old. I can’t think of a leftist revolution, as we think of leftists, before 1789. Maybe the goliards but they were 14th century hippies. They didn’t chop anybody; they made love, not war,

  8. I left the following comment on a discussion at Neptunus Lex (in response to a post about this column by Ezra Klein):

    Seems to me that many leftists oppose the idea of insurance in principle, since many leftists generally oppose allowing individuals and businesses to treat different individuals differently. Klein frames it as forcing all insurers to cover lead poisoning. Other ways to frame it might be as forcing elderly women to subsidize auto insurance for young men, or forcing college students to subsidize health insurance for old people. Which arbitrary forced subsidization scheme should we choose? Klein doesn’t say, though he implies that the politically dominant constituency will decide. Most likely he would end up paying a lot more to subsidize the geezers, and everyone would pay more, indirectly, via higher taxes, crappy service, long waits and more-explicit forms of rationing. Smart fellow.
    He also ignores the huge issue of first-dollar vs. high-deductible coverage. This is typical of many on the Left, who simply don’t understand the economics and can’t handle such complex issues as the tradeoff between broader, more expensive coverage and narrower, less expensive coverage.
    I wouldn’t trust him to fix my brakes, much less decide what kind of insurance I should get.

    It’s not about auto insurance but the main point is related. An “insurance” scheme that pays for everything and covers everyone isn’t insurance, it’s merely a subsidy and it increases moral hazard: young men paying too little for auto insurance, for example. Real insurance is priced according to realistic estimates of risk and therefore discourages people from taking excessive risks by forcing them to bear the full costs of the risks they take. IOW, real insurance has beneficial social effects, whereas subsidies that are called “insurance”, but that are made without considering different individuals’ different risk profiles, encourage precisely the wrong behaviors. Many leftists are against insurance in principle, because they are against any drawing of distinctions (“discriminating”) between individuals, and are thus unable to resolve the contradiction here.

  9. Not only does Obama not understand the concept of insurance, I’ve had several dialogs with supporters of Obamacare, otherwise very bright and well-educated (or, actually, well-trained in their fields, but perhaps narrow-gauge) who have no clue what insurance underwriting is about. And these are not artsy or literary types, these are people who use math in their jobs and are otherwise comfortable with it. But try to explain even the basics of actuarial practice and they just cannot get it. It’s just part of teh world they live in but they have no understanding or interest—kinda like me and who’s who on American Idol.

  10. It’s hard to say what Obama and the Dems believe about insurance, as opposed to what they say in order to scapegoat insurers and fool the sheep-like public. It’s part of a well-known “collectivization” strategy. Stalin used it:


    Similarities between the Democrats’ drive to pass Obamacare and the methods used to collectivize agriculture in the Soviet Union:

    1. Scapegoats – Stalin used the evil “kulaks” as an excuse to take over agriculture. Democrats demonize doctors and insurance companies as an excuse to take over the medical field.

    Stalin relied on a scapegoat because the ordinary citizen could relate to that more easily than to abstract notions of economics and Marxist theory:
    [T]he naming of the kulak enemy … presented a flesh-and-blood foe accursed by history; and such a target made for a far more satisfactory campaign than mere abstract organizational change. – Robert Conquest, “The Harvest of Sorrow,” p120

    Proponents of Obamacare also use scapegoats, because such a target makes for a far more satisfactory campaign than mere abstract organizational change:
    We should be prepared to respond to the other side, but we don’t need to … feel pressure to answer their accusations point by point. Instead, we should treat them as agents of the insurance lobbyists who want to maintain the status quo. – from the Health Care for America Now website

    2. A specious crisis atmosphere – Stalin’s was a trumped-up “bread crisis.” Obama’s “crisis” is a combination of rising medical expenses and the number of uninsured people. A crisis, we are told, is a terrible thing to waste — even if it’s a trumped-up crisis you created yourself.

    3. A specious class war is posited – Stalin’s was between kulaks and the middle and poor peasants; ours pits “Brooks Brothers ” protesters (owners of “Cadillac” insurance plans) against the uninsured.

    (for more, see )

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